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23 June 2020 / Stephanie Hawthorne
Issue: 7892 / Categories: Features , Profession , Pensions
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COVID-19: Pensions in the eye of the storm

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Pension lawyers have been under pressure during the coronavirus emergency, says Stephanie Hawthorne
  • Many DB pension schemes are in a parlous state while DC asset values have shrunk.
  • Pent-up litigation will come from both COVID-19 and non-COVID-19 issues.

Even before the carnage of COVID-19, many businesses were ailing, often weighed down by legacy defined benefit (DB) pensions schemes. Now, all too many well-known firms like Debenhams, FlyBe and Carluccio’s have fallen into administration. The legal repercussions will last for years. For failing firms, their often underfunded DB schemes will fall into the lifeboat Pension Protection Fund with worse outcomes for members. This is an intractable problem: a huge slew of schemes—689—have funding only at 50-75%. Worse still, 49 schemes have funding below 50%, according to The Pensions Regulator’s 2020 paper, ‘The Pensions Landscape’ (see Bit.ly/3ePYivX). Even the other 3,499 schemes’ funding hovers between 75-100%. COVID-19 has compounded this black hole and a three-month emergency easement from the Regulator until 30 June on deficit repair contributions

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